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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: gregor_us who wrote (24605)	1/13/2005 10:07:58 PM
From: mishedlo	Read Replies (1) of 110194

My point is as follows: Heinz thinks he is describing a bond market that is classically set up for further gains, based on sentiment. However, what he is unwittingly describing is a bond market that is seriously distorted. The negative sentiment towards the bond market is rational--however, the sentiment has been produced by the distortion, so as Heinz correctly points out, that sentiment is doomed to be ever frustrated (for now). But he never grants the distortion. That's the blind spot. You want a blind spot? Here is the blind spot. You say you understand my argument but did not address a single question that I raised. Not a single one. You sit back and play both sides of the issue quite often. I would like to see you address some of the questions I asked. There is a zillion $ bond market out there. Bond managers balance assets. Right now they are chasing yield. Anything damn thing with a spread to treasuries. There is a TON of demand if and when agencies are sold to buy treasuries. Bond managers buy bonds. That is what they do. If they do not like agencies they sell them and buy something else. What else? YOU TELL ME! Just what the F is so complicated about this argument? .... 1) What makes anyone think it is in Japan's best interest to sell? Sell to buy what for Christ’s sake? Japanese bonds at 0%? Quite simply the argument has NOT been made. What about this do you people fail to understand: JAPAN DOES NOT WANT THEIR CURRENCY TO RISE. 2) If Japan sees value in treasuries what the F do you know that they do not? Please enlighten us. 3) What guarantee is there that someone else will NOT buy IF Japan sells? 4) What makes you think that Europe will not be intervening in the US$ or treasuries to make up for any lack of demand from Japan? Are they not bitching to high heavens? Your counter seems to be "where is the money going to come from" and "it's just a distortion from Japan" Well where the F is the money going to come from to buy copper or gold or houses or anything else? What pray tell is the answer to that? Tell me, right now point blank where the money is going to come from to buy ANYTHING? Am I supposed to believe that China has internal demand to suck up the world’s commodities supporting the price of copper, iron and everything else and there is no money for anyone else to buy anything including treasuries? Answer that paradox please! You criticize heinz and I for suggesting that treasuries will bought on the argument there is no money but supposedly there is money for everything else. Tell me why there is money to buy gold or silver or copper if there is no money for anything else. Tell Me! Is it distorted? Hell yes it is distorted and neither Heinz or anyone one else said otherwise. But in the fantasyland of everyone here, it is 100% ok and there will be money to buy gold and silver and copper but no money to buy anything else. If housing is going to crash who the F needs copper? If cars are going to crash who the F needs steel? If there is no money to buy anything then aren't we talking 100% DEFLATION? Now, in deflation do or do not govt bonds tend to rise or fall? Housing crashing is the #1 delima that all the inflationists have yet to explain. EXPLAIN INFLATION IN THE CONTEXT OF A HOUSING CRASH AND ALL THE LOST JOBS THEREOF! You can NOT do it. Please tell me why we need so much copper, steel, or aluminum in an auto/housing crash? Please remember that China is a steel exporter. If there is no money who are they exporting too? If we are losing jobs in a housing crash please tell me who has money to buy what. Am I supposed to believe that Europe and Japan go on a huge buying spree here? Tell me! Tell me that when that crash happens we have inflation. Tell me! If you can not answer that then you can not explain why treasuries are a short. In the fantasy land world here treasuries collapse houses collapse stocks collapse copper goes to the moon gold goes to the moon but there is no money for anything else including treasuries I guess distortions are only one way and there is money for copper but not treasuries Please get real PS: Copper bulls better damn well hope that the FED keeps interest rates low or copper is a huge short. If it is OK for copper bulls to be long on the "distortion" why is it wrong for treasury bulls to be long on the same distortion? Answer that. Mish

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